BCCPA Challenges Care Home Closure

In February a story broke in the Coquitlam Now newspaper which revealed the Fraser Health Authority was planning to shut down a BCCPA member 76 bed care home. The Burquitlam Lions Care Centre (BLCC) was made aware of the impending closure by their local MLA Selena Robinson. She had inadvertently been alerted by the Health Authority prior to the BLCC being formally notified.

On April 3rd the BCCPA wrote a letter to Dr. Nigel Murray, CEO for the FHA, expressing our deep concerns regarding the process and circumstances leading up to and including the decision to shut down BLCC. What follows are excerpts of our letter:

“As B.C.’s residential care industry association, we are deeply concerned about several issues that have arisen due to the Fraser Health Authority’s (FHA) impending decision to end its Affiliation Agreement with the Burquitlam Lions Care Centre (BLCC), a 76 complex care facility owned by the Burquitlam Care Society (BCS), and directly award the 76 beds to Baltic Properties.

In particular, it appears that FHA’s actions lacked administrative fairness and transparency, which could have a significant negative financial impact on B.C.’s continuing care sector. FHA’s actions appear to be arbitrary and do not support the long-term interests of B.C.’s seniors, provincial taxpayers or residential care operators.

…based on our experience we know that the operation of a residential complex care facility is no longer economically feasible with a capacity of fewer than 125 beds…

Brief Background

FHA awarded part of the RFP to Baltic Properties (136 new residential care beds and 24 mental health beds). FHA also directly awarded BLCC’s 76 beds to Baltic Properties. The 76 beds were not part of the RFP.

FHA retained John Singleton, QC, to act as a Fairness Advisor to review the direct award to Baltic Properties. Keith McBain, ‎Executive Director, Residential Care, Assisted Living & Specialized Populations, has advised us that FHA’s submissions to Mr. Singleton, and Mr. Singleton’s opinion supporting the direct award, were both provided verbally.

In late January 2014, Mr. McBain advised BCS that FHA had decided it would be terminating its Affiliation Agreement with BLCC. The decision would see BLCC closed by mid-2016.

As reported in The Tri-Cities Now, David Dines, BLCC administrator, said “It will be a huge surprise to residents and families… it will be a shock.”

FHA did not provide BLCC with an opportunity to submit a redevelopment proposal.

Mr. McBain has advised us that operating care homes with less than 125 beds is not economically feasible.

The requirement for fairness only arises when the Health Authority is engaged in a public offering involving multiple proponents. As this was a direct award, outside of a public RFP process, I am satisfied that there were no fairness concerns raised by awarding these additional 76 beds outside the RFP process

Lack of Administrative Fairness & Transparency

The situation with BLCC has unfolded in a manner that lacks administrative fairness and transparency in at least two respects: (1) the RFP and direct award process, and (2) the failure to provide an opportunity to submit a redevelopment proposal.

1. RFP Process & Direct Award

Had the 76 beds been included in the 2012 RFP, there is a strong likelihood that taxpayers would have been able to achieve even further savings – as proponents would have been bidding on a larger package of beds.

In addition to a missed opportunity for further savings, it is troubling that the Fairness Advisor’s review process was conducted verbally. This is out of step with administrative fairness, transparency and accountability.

2. Lack of Opportunity to Submit Redevelopment Proposal

Further, FHA’s failure to provide an opportunity to submit a redevelopment proposal is contrary to fair business practice. It demonstrates a lack of respect for the business relationship between health authorities and operators.

Even more, the failure to provide operators with an opportunity to submit a redevelopment plan is contrary to provincial policy. It is our understanding that in 2005, after extensive consultation with the industry, Treasury Board staff drafted and the Ministry of Health approved, the Policy on Managing Change (the Policy).

The Policy applies to termination of contracts and preferential consideration of existing providers. It ensures an existing facility is given priority consideration and an opportunity to submit a redevelopment proposal, rather than having to compete in an open competitive tender.

The Ministry of Health placed the Policy in the Home and Community Care Policy Manual (the HCC Manual), as section 6D 1-2. When the Ministry of Health revised the HCC Manual in 2010, section 6D 1-2 was removed.

We have been advised that the FHA no longer considers the Policy as being in effect. However, our Association is not aware that the Ministry of Health has formally revoked the Policy. In particular, we are not aware of any correspondence from the Ministry advising the industry that the Policy is no longer in effect.

Burquitlam Lions Care Centre

If FHA no longer considers the Policy to be in effect, we are deeply concerned about the negative financial implications on the sector. Without stability, the cost of borrowing goes up for all contracted care providers and that cost must be passed on to taxpayers.

The Policy is very positive for the sector, as it stabilizes the market – thus, providing confidence to financial lending institutions.

We acknowledge that government has a responsibility to ensure older seniors’ facilities are refreshed, renovated and, when necessary, rebuilt. To do this, however, owners/operators need access to capital.

When contracts for funded beds are seemingly arbitrarily terminated, financial institutions become less willing to provide mortgages to anyone in the sector. Financial institutions need assurances of stable revenue from funded beds – something the Policy helps ensure. We believe that the lack of access to affordable mortgages will result in fewer operators being able to refresh, renovate or rebuild. This is contrary to the best interests of B.C.’s seniors in need of residential care.

We will be asking the Ministry of Health to reaffirm the Policy on Managing Change, and we will seek to establish a working committee between industry and government to determine best practices regarding the renewal and rebuild of older care home stock…”

The BCCPA then asked the FHA to undertake an independent review of the circumstances and processes that led up their decision to shut down BLCC.

Fraser Health Authority Responds to BCCPA

On April 11th, the FHA responded to our concerns in writing. To view Dr. Nigel Murray’s letter in its entirety, please click here.

Several key items within the response letter remain of concern to us.

The FHA will not support our request for an independent review

FHA confirms that care homes with less than 125 beds are not economically feasible

The Ministry of Health’s Managing Changing Need policy is no longer being adhered to by the Health Authorities.

The Fairness Advisor and FHA conducted only verbal discussions pertaining to a significant direct award

125 Beds – A New Threshold For Economic Viability

The FHA contends in their letter they have determined care homes under 125 beds are not “economically feasible”. They state “…based on our experience we know that the operation of a residential complex care facility is no longer economically feasible with a capacity of fewer than 125 beds…”

Lack of Written Documentation Regarding Fairness Advisor

It has been confirmed that Jeffrey A. Hand, the lawyer who acted as the FHA’s Fairness Advisor regarding the direct award, did not provide any written documentation to support the decision. Dr. Murray states “I do acknowledge the concern voiced in your letter regarding the consultation with the fairness advisor having been conducted orally. On reflection we agree that this process should be been conducted in writing. We therefore recently contacted the fairness advisor to request that he produce a written summary of the conversation based on his file notes. A copy of the fairness advisor’s April 7, 2014 letter is enclosed for your reference.”

In a separate letter Hand states he does support the process undertaken by FHA to close BLCC and direct award their beds to another provider. He states “my advice, subject to you confirming that such an award conformed with any internal procurement requirement policies within Fraser Health for direct award contracts, was that there were no fairness issues relating to the RFP process that had already been completed.”

Hand goes on to state “the requirement for fairness only arises when the Health Authority is engaged in a public offering involving multiple proponents. As this was a direct award, outside of a public RFP process, I am satisfied that there were no fairness concerns raised by awarding these additional 76 beds outside the RFP process.”

Managing Change Policy Being Ignored

The BCCPA asserts that the Ministry of Health’s Managing Changing Need policy remains in effect — as the industry and operators have never been formally advised it has been revoked. Based on what has transpired with the BLCC closure, we also firmly believe the FHA is not operating within “the spirit” of the policy.

Next Steps – Taking Further Action

In response to the FHA letter, later this week the BCCPA will be requesting the Deputy Minister of Health to look into our concerns. In particular, we will be asking for clarification regarding the Managing Changing Need policy and emphasize its importance in helping to ensure stability and financial security within the continuing care sector in BC. We will be keeping our members informed of any latest news and plan to provide an update at our upcoming Annual General Meeting to be held in Whistler later this month.

If you have any questions or concerns, please do not hesitate to contact the BCCPA.